Big time investor losing his touch?

by WP17 Nov 2015

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Big time investor losing his touch?

The New York-based hedge fund, Pershing Square Holdings, is down a significant amount after investment into one of its biggest holdings, Valeant Pharmaceuticals International continues to mean losses. Ackman is CEO and founder of the company.

Valeant itself plunged by 50% in just one month following accusation it had been issuing fraudulent invoices.

Ackman and Valeant attempted to take over Allergan Pharmaceuticals in 2014 but the investors at Allergan claim they violated insider-trading rules by buying 10% of Allergan before making this public knowledge. This 10% ownership led to the team taking over the company and thus claims of fraud.

The dispute is still on-going and could be the cause of Valeant’s decline and subsequently Ackman’s Pershing Square Holdings’ losses.

Before this, Valaent, the Quebec based drug maker, had contributed 2.8% to the hedge fund’s gross performance. Ackman currently owns a 5.7% stake in the company which has seen negative returns since August.

Aside from Valeant, Pershing Square has large investments in stocks like Air Products, Canadian Pacific and Zoetis. Wile most of its investments have detracted from gross returns, it is its investment in Valeant that has caused the most damage.

During a Pershing Square Capital Management Conference Call with investors Ackman said: “It’s been a pretty interesting period performance wise. Interesting in a negative way performance wise for Pershing Square as a result principally of decline in Valeant stock price and then some decline in holdings.”

He also talked about how people were ‘betting against’ the holdings company and said it was assumed as a result of recent events they were going to be forced to dump various investments but Ackman said: “We air on the side of transparency.”